The conservative Liberal-National government’s Climate Change Authority has urged the government to move towards a form of Emissions Trading Scheme (ETS) for the electricity industry that could resolve a key part of the political divide over Australia’s response to global warming.
The electricity industry would face an “emissions intensity” based carbon scheme with baseline emissions of carbon dioxide and other planet warming gases steadily declining to hit zero “well before 2050” under the proposals set out in a report from the authority.
Eligible local carbon credits could be used to help meet the targets but the power industry would not have access to international credits, so as to force generators to reduce their emissions.
The authority recommends tougher emissions cuts for other emissions-intensive sectors such as heavy industry and mining under the so-called safeguard mechanism of the government’s Direct Action plan, to bring the policy into line with Australia’s international obligations.
Passenger vehicles would face tougher emissions standards and power companies would participate in the government’s Emissions Reduction Fund, which pays for cuts in emissions on a per tonne basis.
The trucking industry could also face tougher emissions standards if this satisfied a cost-benefit analysis.
The proposals would be a significant tightening of the coalition’s climate change policy if the government of the Prime Minister Malcolm Turnbull accepts them.
They would also representing a long awaited “convergence” in the climate policies of the major parties.
The government sought the review in 2014.
However, the proposals would have to overcome stiff resistance from the Nationals, whose leader Barnaby Joyce has ridiculed caps on emissions in the past, and conservative coalition MPs, who have shown little appetite for toeing the line on other touchpaper issues.
Authority chair Wendy Craik said it would be up to the federal government, which has previously ignored ambitious carbon reduction targets set by the CCA, whether to adopt the report.
“We hope they take it into account as part of their review [,of climate change policies in 2017,” Ms Craik said.
She stood by the report despite the dissent of two members who are expected to release their own report tomorrow.
Grattan Institute energy program director Tony Wood said the report could be palatable to the government but they would need to tread carefully given emissions trading policies helped bring down the Labor governments of then Prime Minsters Kevin Rudd and Julia Gillard.
“How credits are created and traded would need to be managed sensitively,” Mr Wood said.
Generators such as Origin Energy support an intensity-based scheme but the LNG industry cautioned against threats to competitiveness.
Climate campaigners said the report neglected the need for deeper emissions cuts up front.
“The implied emissions reduction pathway in the report would use up 90 per cent of a Paris carbon budget for Australia by 2030,” said John Connor, chief executive of The Climate Institute.
The authority said a market-based emissions intensity scheme was needed for Australia to meet its emissions targets at lowest cost and in a way that could be adapted over time to meet the goal of limiting temperature increases to less than two degrees Celsius agreed at last year’s Paris climate talks.
